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Virginia bill overhauls taxes on telecommunications services(News & Advance, The (Lynchburg, VA) (KRT) Via Thomson Dialog NewsEdge) Jan. 27--RICHMOND, Va. -- The long list of taxes and fees cluttering the bottom of monthly phone and cable bills may be about to change. A bill passed by the House of Delegates on Thursday will overhaul the way taxes are paid on all telecommunication services. If approved by the Senate, the bill will impose a statewide 5 percent tax on telecommunication services. The bill would apply to all technologies, many of which are not currently taxed. Under the current code, localities set their own tax rate for telecommunication services. The rates can very greatly from place to place. Some technologies, such as landline phones and cable TV, fall under the tax umbrella, while others, such as voice over Internet service and satellite TV do not. "Everybody wins when everybody pays the same rate for the same service, no matter what technology they use or where they live," said Del. Samuel Nixon Jr., R-Chesterfield, the bill's chief patron. Nixon said the biggest winner will be residential customers who are moderate telephone users. According to the Council on State Taxation, taxes account for about 30 percent of a typical phone bill in Virginia. The national average is about 15 percent. On the other hand, some technologies such as satellite TV will be taxed for the first time. Nixon said the bill isn't expected to change the total amount of revenue localities receive. Secretary-designate Preston Bryant, of Lynchburg, had been working to get the tax reform enacted since 2002. Since Bryant left the House this session, Nixon has taken over the fight. The House passed the bill 62 to 35 Thursday afternoon. Many of the votes were in line with which localities stand to save money and which would pay more. Del. Shannon Valentine, D-Lynchburg, voted in favor of the bill. Nixon cited an industry study that showed Lynchburg residents would save $1.85 a month in households with only landline phone service or $1.60 on a households with a landline phone, long distance service and a cell phone. Del. Lacey Putney, I-Bedford, voted against the bill. According to the study, all people in Bedford City and County stand to pay more tax under the proposed plan, except for households that only have local landline phone service. "It was not to the advantage of users and consumers in my district," Putney said. "It amounted to a significant tax increase." Nixon said some lawmakers opposed to his bill fear the reform would raise taxes. Del. Ben Cline, R-Rockbridge, voted against the bill despite the industry study showing every customer in Amherst County could benefit from the change. "You can spin numbers any way you want," said Cline. Del. Kathy Byron, R-Campbell, and Del. Watkins Abbitt, I-Appomattox, also voted against the bill. Nixon said the bill should not amount to a tax increase or cut. According to a 2005 report by the Auditor of Public Accounts, Virginia's 170 local governments raised $425.8 million in telecommunication taxes in fiscal year 2005. In addition, the standard 75 cents fee for wireless 911 service raised $38.9 million. The tax reform bill would also standardize landline 911 fees to 75 cents per month. Localities currently set the 911 fee. For example, Lynchburg residents pay a $2 monthly 911 fee for a landline phone. Bryant said, "If this is passed, Virginia will be the only state in the nation that has undertaken comprehensive telecommunications tax reform." Nixon said the old tax system is outdated and localities are losing out on tax revenue from users of new technologies. "The tax model was built on a World War II way of thinking," Nixon said. "There's a telephone and nothing else. The technology has changed but the tax hasn't." |